APTMA urges FBR to tackle misdeclaration of textile imports under export facilitation scheme

The All Pakistan Textile Mills Association (APTMA) has called on the Federal Board of Revenue (FBR) to take immediate action against the growing issue of grey cotton fabric misdeclaration under the Export Facilitation Scheme (EFS). APTMA warns that this malpractice is putting the domestic textile industry at risk by undermining fair competition and harming local manufacturers.

In a letter to FBR Chairman Rashid Mahmood Langrial, APTMA Chairperson Kamran Arshad highlighted the ongoing issue of importers misclassifying partially processed or greige fabric as “prepared for dyeing” (PFD), thereby taking advantage of tax exemptions under the EFS. This comes despite the exclusion of grey cloth, raw cotton, and cotton yarn from the scheme, as outlined in SRO 1435(I)/2025 issued on August 5, 2025.

APTMA’s letter states that this misdeclaration is harming the local textile sector, as imported goods enjoy zero-rated duties, while identical locally produced products face an 18% sales tax. This practice not only distorts market conditions but also undermines the competitiveness of Pakistan’s domestic manufacturing.

The association also pointed out that this issue, which was first raised in December 2025, continues unresolved. APTMA has urged the FBR to remove all woven cotton fabrics under Chapter 52 of the Pakistan Customs Tariff from the EFS to level the playing field for domestic producers.

The letter also calls for a thorough audit of EFS participants, emphasizing that imported inputs are often diverted for domestic use, violating regulations and causing revenue losses. Ensuring that imported inputs match actual exports is critical to safeguarding the integrity of the EFS and preventing misuse.

Aptma chairman stressed, “This is not just a compliance issue; it’s about preserving the viability of local weaving units, protecting jobs, and ensuring a fair competitive environment for domestic manufacturers.”

Industry experts also support APTMA’s stance, noting that misdeclaration of grey cotton fabric under the EFS has been a persistent issue, especially since the withdrawal of zero-rating on local supplies in FY2024. Analysts warn that unless the FBR tightens enforcement and conducts more thorough audits, local textile manufacturers could face mounting challenges from imports exploiting the system.